Weekly Feed Market Commentary

Published 30 July 14

Grains

Harvest progress continued to be the focus for grain markets last week. The French harvest increased pace as drier weather returned, but the potential impact of earlier rain on wheat quality continues to prompt concerns. Reports from IKAR, a Russian analyst’s firm have suggested that the Russian wheat harvest in 2014 could total 57.5Mt. This is an increase from the 56.3Mt previously estimated following positive yield reports in several regions, and further up on the 52.1Mt the USDA estimated was harvested in 2013.

The latest UK harvest report by ADAS indicated that by 22 July, an estimated 10% of the UK combinable crop area had been harvested. Overall, progress was reported as good in the second week of the UK harvest. 35% of winter barley, and 45% of winter oilseed rape was harvested, and the first winter wheat had been cut. Yields for winter barley and winter oilseed rape to date are typically better than average.

UK feed wheat prices continued on the downward trend this week, weakened by the good harvest reports from the EU and UK. Nov-14 UK feed wheat futures closed at £123.95/t on Tuesday (29 July), down £3.70/t from the previous Tuesday, and reaching another new contract low.

Annual US crop tours got underway last week, commencing with northern Hard Red Spring wheat crops. Yield prospects were reported as very good, and while it is ultimately only final yields that matter, the tours often prove a target for market attention.  Nov-14 Chicago wheat futures closed at $199.77/t on Tuesday (29 July), down $1.84/t since the previous Tuesday’s close.

US maize crops are well into the critical pollination phase, and the latest fall in prices points to some ‘risk premium’ being removed from the market as conditions to date have been favourable. Chicago maize prices have increased slightly since last week, at Tuesday’s close Dec-14 prices reached $146.06/t, up $1.08/t from last week (22 July).

Proteins

Concerns over dry weather in key US soyabean growing states, and strong export sales provoked a price rally over the past week. Nov-14 Chicago soyabean prices increased by $13.68/t over the past week (22-29 July), and closed at $402.30/t on Tuesday (29 July). As the crop is entering its key phase of development, a lack of moisture now may cap yield potential. Paris rapeseed futures also followed the upward trend, and closed at €332.75/t (29 July), up €10.50/t from the previous Tuesday.

Latest EU Commission balance sheets show that EU oilseed production is forecast to increase by 0.83Mt during 2014/15, to approximately 31.9Mt, from 31Mt in 2013/14. Furthermore, EU rapeseed production is forecast to increase by 1.3Mt year on year to 22.2Mt. As at 25 July, UK rapeseed prices (Erith, Nov-14 delivery) closed at £248/t, up slightly from the previous week.

UK Hi-Pro soyameal prices (Ex-store East-Coast, July delivery) were £317/t (25 July), up £7/t from the previous Friday. UK rapemeal prices (34%, ex-mill Erith, August delivery) also followed the upward trend, and increased by £2/t since the previous week, prices closed at £159/t on Friday (25 July).

Figures and commentary provided in association with HGCA and BPEX.

For further information on the cereals market click here to link through to HGCA website.